Question 25
the cpi basket contains 400 oranges and 800 pens. in the base year, the price of an orange is $1.00 and the price of a pen is
$0.75. this year, urban consumers each buy 300 oranges at $2.00 each and 850 pens at $1.00 each. the cpi this year is

160

Explanation:

Given: CPI basket contain 400 oranges and 800 pens.

          In the base year, price of oranges is $1 and pen is $0.75.

          This year urban customer buy oranges at $2 each and pens at $1 each.

To find consumer price index (CPI), we need to check price of basket in current year and base year.

∴ Current year´s price for 400 oranges and 800 pens =

Now, adding the price to get cost of basket

Cost of basket in current year=

Base year´s price for 400 oranges and 800 pens=

Cost of basket in base year=

Next, calculating the CPI of this year

Formula; CPI=

CPI for the year =

∴ Consumer price index (CPI) = 160.

answer; sensory adaptation;